Medway/Millis May 2016

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Page 16 Local Town Pages www.millismedwaynews.com May 2016 Town of Medway Commonwealth of Massachusetts Medway Town Hall 155 Village Street Medway, MA 02053 Phone (508) 533-3264 Fax (508) 321-4988 April 7, 2016 Dear Medway Resident, On May 9, 2016, Medway residents at the Annual Town Meeting will be asked to vote on the proposed Payment In Lieu Of Taxes (PILOT) Agreement negotiated between the Town and Exelon. This agreement will set in place a twenty (20) year tax plan with Exelon for the proposed power facility to be constructed at their existing site off of Summer Street in West Medway. The proposed PILOT will provide a clear and stable revenue stream to the Town totaling over $75 million dollars over the twenty year period, and will allow the Town to best plan for current and future needs, and will remove financial uncertainty that would otherwise occur on an annual basis without a PILOT in place. This proposed PILOT Agreement will be addressed as Article One on the Town Meeting Warrant. It is important to note though that this vote is NOT a referendum on the proposed project. A YES vote does not indicate support for the project, nor does a NO vote impact the decision to approve the facility in Medway. That decision is strictly in the hands of the State Energy Facilities Siting Board (EFSB), and our Town Meeting process will not influence that outcome in any way. This vote is simply a technical/legal vote on the method and manner on how this facility, if approved by the State, will be taxed here at the local level. Below we invite you to review a series of frequently asked questions regarding this proposed PILOT as you prepare for the Town Meeting vote. In addition, we encourage all residents to visit our Town website, (http://www.townofmedway.org/Pages/MedwayMA_Bcomm/BOS/exelonbulletin), to learn more about the PILOT and the project as proposed. Many informative documents can be found there, including the full text of the PILOT including tax payment tables, and our Host Community Agreement that was also negotiated to provide additional protections for the Community. Finally, please always feel free to contact our Town Administrator’s Office with any questions you may have. Thank you and we look forward to seeing everyone on May 9 th ! Medway Board of Selectmen How does a PILOT work? FAQs About the Town of Medway PILOT Agreement with Exelon The primary value in an electric generating facility is the equipment located on and in the property, and not necessarily the “land value” of the property. As there can be wide variations on the appraised value of the equipment between what the property owner and the Town may determine, the mechanism of the PILOT agreement was established by law in Massachusetts to eliminate uncertainty and give each party proper expectations on payments and revenue. Please see the State law in this link, specifically section (b). (https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter59/Section38H) In addition, the Massachusetts Department of Revenue has issued guidelines on how the PILOT and overall electric generating facility taxing process works. A link to those guidelines is here. (http://www.mass. gov/dor/docs/dls/publ/igr/1998/98-403.pdf) Is a PILOT a So-Called “Tax Break”? Absolutely not. A PILOT agreement, per Massachusetts law, “shall be the result of good faith negotiations and shall be the equivalent of the property tax obligation based on full and fair cash valuation.” In the case of the negotiated Exelon PILOT, the full value of the property, including equipment values, was determined in advance and is part of the overall PILOT formula. What is the proposed PILOT Agreement between Exelon and the Town of Medway? Exelon, through this PILOT, will pay in excess of $75 million dollars to the Town of Medway over 20 years in combined real estate and personal property tax and Community Preservation assessments. Details can be reviewed here: http://www.townofmedway.org/Pages/MedwayMA_Bcomm/BOS/PILOT_10-13-15.pdf Why is the proposed PILOT Agreement good for the Town of Medway? The PILOT Agreement will provide steady and predictable revenue for the Town of Medway for budgeting purposes for the next 20 years. The $75 million dollars will go to our general fund and could be used to fund operational and infrastructure needs, such as education, public safety, and roads & sidewalks, without placing an added tax burden for some of these improvements upon Medway residents. It is important to note that additional revenues due from Exelon through the Host Community Agreement and estimated permitting fees will exceed an additional $4 million dollars over and above this PILOT thus bringing Medway’s projected 20 year revenues in at nearly $80 million dollars. What financially happens if the Town votes against the PILOT Agreement at the 2016 Annual Town Meeting? If the Town votes against the PILOT Agreement at the 2016 Annual Town Meeting then the Town of Medway will be required to make real estate and personal property tax assessments on the Exelon Power Plant each year. This will require the annual cost of hiring a special utility tax professional to appraise the Power Plant. In the likely event that Exelon disagrees with the Town’s assessments, they will have the legal right to challenge those through an abatement process, up to and possibly including a formal court proceeding before the Massachusetts Appellate Tax Board (ATB). (http://www.mass.gov/anf/hearings-and-appeals/oversight-agencies/atb/) Those proceedings, each year, will result in higher technical and legal costs, and possibly lower tax revenues if so decided by the ATB. This PILOT agreement eliminates that possibility and guarantees a consistent and likely higher revenue stream for Medway.
May 2016 Local Town Pages www.millismedwaynews.com Page 17 What could the revenue difference be? To illustrate this, let us use the value originally proposed by Exelon’s consultant at $160 million dollars in year one. The value negotiated and agreed to in the PILOT is $210 million dollars, a figure very close to the Town’s consultant’s appraisal. If the lower figure were to be accepted by the ATB, AND all other formula assumptions in the PILOT remained in place (not likely), this specific revenue loss to Medway (versus the PILOT revenue) could reach $18 million dollars over the same 20 year period. Would a “No” vote on the PILOT Agreement warrant article have any impact on whether or not the Exelon Expansion Proposal is approved or not approved by the Energy Facilities Siting Board? No. The Energy Facilities Siting Board (EFSB) has sole authority to approve or deny the proposed Exelon Expansion Proposal. Town Meeting does not have any authority over approval of the Proposal nor can it legally impact that decision. In fact, the EFSB has concluded its hearing phase of the permitting process and would clearly be prohibited from even considering any action on the warrant in its decision making. This warrant article is not a legal referendum on the construction of the facility. It is strictly a taxing mechanism. Voting down this PILOT agreement does not stop or affect the licensing or construction of this power plant project, but instead will only penalize the Town if the facility is approved. TOWN OF MEDWAY EXELON PILOT CPA PAYMENTS TABLE TOWN OF MEDWAY EXELON PILOT CPA PAYMENTS TABLE NEGOTIATED PILOT CPA PAYMENT AMOUNT YEAR NEW PLANT PILOT VALUE PILOT PAYMENT ANNUAL TOTAL (3% of PILOT Payment) (Due September 1 Annually) 1 $210,000,000.00 $3,830,400.00 $114,912.00 2 $208,950,000.00 $3,811,248.00 $114,337.44 3 $207,905,250.00 $3,792,191.76 $113,765.75 4 $206,865,723.75 $3,773,230.80 $113,196.92 5 $205,831,395.13 $3,754,364.65 $112,630.94 6 $204,802,238.16 $3,735,592.82 $112,067.78 7 $203,778,226.96 $3,716,914.86 $111,507.45 8 $202,759,335.83 $3,698,330.29 $110,949.91 9 $201,745,539.15 $3,679,838.63 $110,395.16 10 $200,736,811.46 $3,661,439.44 $109,843.18 11 $199,733,127.40 $3,643,132.24 $109,293.97 12 $198,734,461.76 $3,624,916.58 $108,747.50 13 $197,740,789.45 $3,606,792.00 $108,203.76 14 $196,752,085.50 $3,588,758.04 $107,662.74 15 $195,768,325.08 $3,570,814.25 $107,124.43 16 $194,789,483.45 $3,552,960.18 $106,588.81 17 $193,815,536.03 $3,535,195.38 $106,055.86 18 $192,846,458.35 $3,517,519.40 $105,525.58 19 $191,882,226.06 $3,499,931.80 $104,997.95 20 $190,922,814.93 $3,482,432.14 $104,472.96 Sub Totals: $73,076,003.27 $2,192,280.10 OVERALL TOTAL: $75,268,283.37
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Medway/Millis May 2016

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